LOUISVILLE, Ky. (WDRB) — Ford Motor Co. and its Korean partner SK On are closing in on $9.2 billion in low-interest government financing to support ongoing construction of their electric-vehicle battery plants in Kentucky and Tennessee.
BlueOval SK, the Ford-SK joint venture, will receive the subsidized loans under the U.S. Department of Energy's Advanced Vehicles Manufacturing Project, which previously committed $2.5 billion to Ford competitor General Motors and its Korean partner LG for their EV battery plants in Michigan, Ohio and Tennessee.
The Energy Department program, established in 2007, also played a key role in the development of Tesla, helping the then-fledging EV startup avoid running out of money in 2010 with a $465 million loan.
The up-to $9.2 billion in favorable financing will support BlueOval's twin battery plants in Glendale, Kentucky, and its plant in Stanton, Tennessee. The plants are under construction and expected to begin production in 2025.
The borrowing is at U.S. Treasury rates, which is cheaper than what the companies could obtain from private lenders, and includes "flexible" terms, according to the Energy Department.
The financing is part of President Biden's effort to steer the U.S. auto market toward EVs, including bolstering U.S. manufacturing of electric cars and their components. Biden's 2022 Inflation Reduction Act is separately supporting EVs with consumer tax credits worth of up $7,500 per vehicle and other subsidies for EV-related manufacturing.
"Expanding domestic production of American-made batteries is critical to reaching the Biden-Harris Administration's goals to have EVs represent at least 50% of all new car sales in the U.S. by 2030," Jigar Shah, director of the Energy Department's Office of Loan Programs, said in an announcement Thursday.
The department announced a “conditional commitment,” saying the loans to BlueOval SK are not yet finalized.
The announcement underscores how automakers are getting significant help from federal and state taxpayers for their push into EVs, which currently account for about 5% of new car sales in the U.S.
Kentucky taxpayers have provided a $250 million upfront contribution to the BlueOval battery plants in the form of a forgivable loan.
The subsidy was especially valuable because the money was paid upfront rather than doled out over 10-20 years, which is more typical of economic development incentives.
